George Osborne wields the axe

The much-anticipated emergency Budget was delivered this week. And for once, it didn't disappoint.

"For once", the event lived up to expectations, said Economist.com. Chancellor George Osborne delivered his long-awaited 'axe and tax' budget this week. He announced the biggest fiscal squeeze since the 1930s 6.3% of GDP by 2014-2015. The aim is to shrink the state, which now accounts for almost half of the economy, and get public debt under control. About 77% of the adjustment will comprise spending cuts, the rest tax hikes.

The budget included a hike in VAT to 20% from January 2011, raising £12bn next year. Capital-gains tax has risen from 18% to 28% for higher-rate taxpayers. Banks will pay a tax on their assets, expected to raise £2bn a year. Corporation tax will fall by 1% a year over the next four years, taking it to 24%, among the lowest rates in the G20. Osborne also launched a clampdown on welfare spending, which accounts for 28% of overall expenditure. This included capping housing benefit and freezing child benefit for three years.

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